Examination Under Oath – Duty To Cooperate

A starting point for understanding an Examination Under Oath (EUO) is start with the principle that an insured has a duty under their insurance contract to cooperate with the insurer’s investigation of a claim.

In the first-party setting, which is the setting under which EUO’s are sought:  Duties of cooperation include the duty to submit to an EUO, the duty to respond to reasonable requests for information and documents, and the duty of candor which would prohibit the insured from concealing information from the insurer or providing false information in support of the insured’s claim.  An EUO and the information obtained therefrom is the core of the duty to cooperate.  The regard the courts have for the duty to cooperate is illustrated in the case, Aetna Casualty & Surety Co. v. State Farm Mutual Auto Insurance Co., a federal case out of Pennsylvania.  Mona Dobbins, the State Farm insured, refused to give a statement to State Farm regarding a car wreck that occurred in August, 1987.  In the accident, Dobbins struck and killed a pedestrian with the vehicle she was driving, which had been leased by her employer Brookline Social Club.  Dobbins fled the scene of the accident.  In light of the criminal proceedings against her, Dobbins refused to give a statement to State Farm based on her 5th Amendment privilege against self-incrimination.  Later, in August of 1987, State Farm sent Dobbins a reservation of rights letter.  In December of 1987, a civil action was filed against State Farm’s insured, Dobbins, by the estate of the pedestrian killed.  After a default judgment was obtained by the estate against Dobbins, State Farm sent two letter to Dobbins in March of 1989 “denying coverage under its liability policy issued to the Brookline Social Club and refusing to defend or indemnify her because of her refusal to cooperate with State Farm’s investigation.  Following State Farm’s denial of coverage, the estate of the pedestrian killed presented an uninsured motorist (UM) claim to Aetna, the uninsured motorist insurer.  After Aetna paid the UM claim, it filed an action against State Farm for indemnification from State Farm for the UM claim paid by Aetna.  The jury returned a verdict in favor of State Farm finding that State Farm insured, Dobbins, breached her duty to cooperate and that State Farm had suffered substantial prejudice.  Aetna filed a motion for judgment notwithstanding the verdict.  Upon consideration of Aetna’s motion for judgment notwithstanding the verdict, the court upheld State Farm’s coverage denial, rejecting Aetna’s argument that Dobbins’ 5th Amendment privilege excused her breach of contract as a matter of law.  As one commentator indicated, “In these trying times of exaggerated and intentionally false claims, EUO’s offer the insurance company’s best chance of aggressively investigating first party claims in a good faith atmosphere.  EUO’s should be effectively utilized by the insurance company in its search for truth in the war against arson and false claims.”